How Honor is Gaining Cred in New LA Market

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With investors’ eyes on innovations in home health, some startup businesses are commanding attention with big fundraising grabs. Honor, a San Francisco-based in-home care provider that has raised $20 million* in funding rounds, has recently expanded into its second marketplace.

Home Health Care News spoke with Honor’s Steve Seigel, who is the new general manager for the Los Angeles market, the company’s second geographical location since launching in San Francisco last year. After beginning his career as an investment banker, Seigel went on to become a health care executive in revenue cycle management, and now is a prominent angel investor and philanthropist in LA and Orange County, sitting on the Cedars Sinai Medical Center Board of Governors, among other positions.

It’s these local connections and knowledge that Seigel is tapping to position Honor as a leading player both with consumers and health systems in LA, with the goal of helping the startup gain credibility, market share, and a high-quality workforce as it expands into new territory.

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Tell me about your new role and why you decided to work with Honor?

Expanding to Los Angeles is the second geo for Honor outside of San Fran. For us, it’s a really big opportunity, not only for the business-to-consumer-type relationships, but for the relationships with the health systems here in LA. I think a lot of them are really excited about the opportunity for somebody to help reduce readmission rates and also improve patient satisfaction as well. There’s a tremendous amount of opportunity down here in LA.

Part of my role will be scaling up the business-to-consumer side. We’re also looking to have those partnerships and discussions with the health systems down here. Another big aspect will also be partnering with the local non-profits, as well. When you see home care, it’s a very local, fragmented type of industry. I think it’s really important to have some of the local care partners here involved with what we are doing at Honor.

I think no matter where you are in the country and the world, how to deal with our aging population is a huge question. It was such a calling for me, and for this type of industry, you have to have a big passion behind it. At the end of the day, it’s a very localized and people-service business.

What are some of the local non-profits Honor is engaging with in LA and how do those relationships play into Honor’s expansion in the area?

There are a lot of local non-profits. In March we announced our partnership with the American Cancer Society (ACS). What is unique about what we are doing in being able to partner with them is take their licensing and their protocols, and be able to put it into our care guidance. In addition to receiving training for individuals with cancers, our care professionals will be able to detail to their clients how to deliver that care at home through our app.

With the ACS here in LA, there is a non-profit called Concern Foundation. In 1968, 15 couples in LA raised money because one of their friends had cancer. From that, it’s turned into over $55 million being donated to over 700 cancer centers around the country. This is one of the things we are going to start to engage in. We take everything that Honor has to offer being a partner with ACS, but then it’s a very localized, LA-type non-proft that is a perfect fit to get our name out there.

What are some of the biggest challenges of opening a second branch in the Los Angeles market?

LA is very widespread. In just the city of Los Angeles there are over 3 million people. In LA county there are over 10 million. We don’t have the best system for public transportation, which means all of our care professionals need to have cars. So, we need to think about being mindful in terms of travel time. Navigating all the different pockets of LA and understanding that if something is three or four miles away, it could actually take you a lot longer. You really need someone local because you need someone to understand the geo down here, to understand the layout of the actual geography. That’s a very local problem to LA that would be very different [elsewhere].

We’re not a San Francisco tech company, we have a tech background, but we have a local care feel. That takes time to be able to deliver that, especially in an on-demand service. So far it’s been extremely well received. There are a lot of mom-and-pop historical home heaths down here. From the health system standpoint, we have been very well received for our patient outcomes.

How does Honor operate differently in Los Angeles from its Bay area origins?

If you think about the weather and the lifestyle in LA, people want to stay in their homes. There’s a real opportunity to be able to bridge that gap by providing great care and allowing people to age in place.

A lot of the services are obviously very similar, in terms of vetting the care professionals who have undergone vigorous background checks. We are doing the exact same thing here in LA as we are in San Francisco—the proprietary tech is the same, the care pros, the service flexibility, the 24-hour consultation. In terms of pay, in terms of all the tech, we are very similar as we operate up in the Bay area.

Tell me about the process of ramping up hiring in the Los Angeles area?

The big coverage story for us was the W-2 initiative. Being able to give care professionals better wages and having a W-2 with benefits and equity in the company, our attrition rate has been really low. It’s really helping us be able to grow and scale when we don’t have the turnover. On average in this industry, there’s about a 50%-60% turnover. We’re below 15%. So we have unbelievable stats when it comes to that, but we are also extremely selective in who we choose. By only taking the top 5%-10% of people who apply, we’re able to ensure that people want to be here for the long term, and that they want to work for us at Honor.

I think we’ve been able to deal with a lot of these pressures by thinking about that from the onset. That’s going to allow us to contiue to scale and not have some of those other challenges that you’ll see in some of the other companies. We are seeing benefits from creating a different type of environment. We not only want to champion providing great in-home care, we also want to champion being a great employer.

Honor has been touted as a success story in terms of its fundraising rounds. Why do you think home health is becoming a popular target for investment?

During the first wave of innovation, you saw disruption with transportation from Uber. You saw disruption with hotel lodging from Airbnb. But health care is such a big industry, and it’s a $3 trillion issue for us in the United States. It’s very hard without the right partner to go and disrupt health care because you really need that expertise.

I think since Obamacare, and since we’ve had this big shift into value-based purchasing and reimbursement, especially for Medicare, there’s going to be more innovations around our health system and platforms. Whether it’s to help platforms with quality assurance or closing ways to bring value back to providers, people want to have a seamless transition of getting their information to the care providers. One of the things that will be a key anchor in that is home health.

It’s not only venture capital; it’s a lot of the corporate ventures as well. A lot of the strategics now are looking at bringing someone in house and help develop a lot of these different feeder companies that could potentially help them on their bottom line. It’s absolutely a focal point and we are hitting it right when the iron is hot.

*Editor’s Note: A previous version of this story stated that Honor has raised $38.5 million. HHCN regrets the error.

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